Good for the economy while good for your health

October 19, 2015

Prominent among the proposals for the future from Mr Turnbull as he assumes the prime ministership are ones that relate to economic growth. He seeks a more agile economy, one in which innovation is promoted and prized and where the negative forces of debt and deficit are dealt with by increasing productivity and growth. These aspirations are supported by stronger recognition in the new Cabinet of science and innovation.

Recently I have had cause to reflect on the place of health care in one piece of the Australian economy. Specifically, I was considering how much health care for the million citizens in western Sydney actually contributes to the economy. The answer is a lot. So, rather than portraying health care as a terrible drain on the national economy and incessantly saying we should cut our costs, we might express it differently.

We’re an investment, not a cost!Our health care is based strongly on science and innovation. The revolution that has occurred in diagnostic and therapeutics due to new technology is profound. Procedures that once took days now take minutes. New drugs work wonders. CT and MRI have completely replaced the ghastly contrast-medium angiograms and pneumoencephalograms. The productivity of surgeons and other proceduralists has multiplied many times over.

So, if you are looking to grow an ‘industry’ through science and innovation, you could do no better than to look at health. It leads the way. Great efficiencies and immense amounts of suffering due to dreadful procedures have been banished by science and innovation.

In western Sydney, the health services provide care to nearly a million people. Public hospital and associated community services operate with a recurrent budget of nearly $1.4 billion per annum. That’s a lot of money pumped into the local economy. General practice likewise generates local expenditure in the millions.

Whether all this money is wisely or optimally spent is a separate and (I agree) an important question. But overlaying this concern is the fact that health care is a big contributor to the Australian economy.

What is the goal of the economy, we may ask? Surely it is to support the Australian community and enable us to compete in the world to maintain our prosperity and assist, as we see fit, to bring less-developed nations up to speed. Given that the segment of the global economy in which we compete is highly innovative and science-based, then we need to place emphasis on those attributes here Down Under.

As our future prosperity is unlikely to depend as heavily as it has in recent decades on ripping stuff out of the ground and selling it to China, inventing nothing, doing no innovation, making no scientific progress and then buying in all the creature comforts that we need from the US and Japan (and increasingly form China), we need to achieve self-sufficiency in innovation. That requires investment – in science, technology and education.

While it is hard to see these opportunities through the clouds of day-to-day slog in our hospitals and surgeries, investment in medical technological innovation, the education of smart scientists to develop even more and better equipment and drugs, the support of health research of all sorts – these things make an economy grow. These are the ways in which we develop economic agility and the nimbleness necessary to be able to adapt to change.

Health as a superior good

There is another important fact that tends to get in the way of clear perception of where health fits in the economy, and that is the complex notion that health is a superior good, something that we spend on almost without limit, constrained only by the extent of our discretionary income.

That is what makes trying to keep health costs under control so difficult. As affluence increases, ordinary goods such as food do not attract all that much additional expenditure. But health? We feel we can never get enough of it, and we are prepared as individuals and as a nation to keep on paying!

We have emerged from a period of economic discussion in Australia dominated by what many experts see to be an exaggerated concern for a relatively small deficit. The real economic challenge is the changing base of our revenue, away from minerals and coal toward service industries such as finance, education and health care. We need to be agile; we need to look for ways to increase our productivity through innovation and invention.

Health can help achieve those economic goals for the nation. Rather neatly, this can occur as a secondary outcome of our continued concentration on providing the best possible care for all Australians.